Merchants and issuers expect to see changes in interchange rates typically in April and/or October from the global card networks. Nearly always, interchange rates go up, but as Bloomberg reported, this time there is a change in direction.
Visa is announcing a decrease in certain transaction categories, stating that it will help to foster more card transactions and fewer cash and check payments:
Visa Inc. is planning the biggest changes in a decade to the rates U.S. merchants pay to accept its cards, hoping to persuade more people to abandon checks and adjusting its fees for new businesses such as ride-hailing services.
“The U.S. credit interchange structure has been largely unchanged for the past 10 years,” Visa said in the document, which was seen by Bloomberg. “Based on the most recent review in the U.S., Visa is adjusting its default U.S. interchange rate structure to optimize acceptance and usage and reflect the current value of Visa products.”
While the changes amount to just a few cents on every transaction, those pennies add up. Swipe fees are already a flashpoint between merchants, banks and payment networks such as Visa and Mastercard Inc. Retailers have long complained about the more than $100 billion they spend each year to accept electronic payments, a figure that’s grown in recent years as fees increase and consumers flock to premium cards, which carry higher interchange rates.
It is anticipated that the other major card brands will follow in some fashion.
One wonders if Visa is also simply looking to create some goodwill. Perhaps to stave off any initiatives to try and regulate credit card interchange similar to debit cards? Perhaps to help its case as it wrestles with legal entanglements over honor all cards clauses? Or maybe it is trying to create a more positive environment while having conversations with the FTC over debit routing concerns with secure remote commerce and contactless cards.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group